Click here for Adobe Acrobat version

******************************************************** 
                      NOTICE
********************************************************

This document was converted from Microsoft Word.

Content from the original version of the document such as
headers, footers, footnotes, endnotes, graphics, and page numbers
will not show up in this text version.

All text attributes such as bold, italic, underlining, etc. from the
original document will not show up in this text version.

Features of the original document layout such as
columns, tables, line and letter spacing, pagination, and margins
will not be preserved in the text version.

If you need the complete document, download the
Microsoft Word or Adobe Acrobat version.

*****************************************************************



                                  May 21, 2010

   VIA CERTIFIED MAIL RETURN RECEIPT REQUESTED

   AND FACSIMILE ((678) 559-0432)

   Boris Jerkunica

   Chief Executive Officer

   Vocalocity, Inc.

   600 Virginia Avenue, NE

   Atlanta, GA 30306

   RE: File No. EB-08-IH-1151

   Dear Mr. Jerkunica:

   This letter is an official CITATION, issued pursuant to section 503(b)(5)
   of the Communications Act of 1934, as amended ("Act"), 47 U.S.C. S:
   503(b)(5) for failure to make certain regulatory filings and associated
   payments in violation of sections 52.17, 52.32, 54.706, 54.711, 64.604 and
   64.1195 of the Commission's rules. As explained below, future violations
   of the Commission's rules and requirements in this regard may subject your
   company to monetary forfeitures.

   By letter of inquiry ("LOI") dated May 21, 2008, the Investigations and
   Hearings Division of the Commission's Enforcement Bureau ("the Division")
   initiated an investigation into whether Vocalocity, Inc. ("Vocalocity")
   violated the Commission's rules and orders requiring interconnected voice
   over Internet protocol ("VoIP") providers to make certain regulatory
   filings and associated payments. Vocalocity responded to the LOI on or
   about July 11, 2008. After reviewing the various responses to the LOI, the
   Division issued a supplemental letter of inquiry on August 20, 2008, to
   which Vocalocity responded on August 29, 2008. In its responses to the LOI
   and supplemental LOI, Vocalocity indicated that it offers its VoIP service
   over the public switched telephone network and/or the internet, and that
   it registered with the Commission on April 1, 2008 pursuant to Section
   64.1195 of the Commission's rules. Vocalocity further stated that it was
   "in the process of getting all 499-Q's up to date and current." Finally,
   Vocalocity admitted that it had not contributed to the Universal Service
   Fund (USF) or the Telecommunications Relay Service (TRS) Fund or to the
   shared costs of numbering administration and local number portability
   until after the Division initiated this investigation.

   Section 254(d) of the Act requires, among other things, that "[e]very
   telecommunications carrier [providing] interstate telecommunications
   services . . . contribute, on an equitable and nondiscriminatory basis, to
   the specific, predictable, and sufficient mechanisms established by the
   Commission to preserve and advance universal service." In implementing
   this Congressional mandate, the Commission directed all telecommunications
   carriers providing interstate telecommunications services to contribute to
   the USF based upon their interstate and international end-user
   telecommunications revenues. The Commission also requires certain
   providers of interstate telecommunications, including providers of
   interconnected VoIP services, to contribute to the USF. In extending USF
   contribution requirements to providers of interconnected VoIP services,
   the Commission also required every interconnected VoIP provider that had
   not already registered with the Commission to do so through submission of
   FCC Form 499-A, in order to facilitate enforcement of the obligations
   imposed in the 2006 Contribution Methodology Order. The Commission
   requires USF contributors, including interconnected VoIP providers, to
   provide certain revenue information on the FCC Form 499-A and the FCC Form
   499-Q ("Telecommunications Reporting Worksheet" or "Worksheet") on a
   periodic basis. The Universal Service Administrative Company ("USAC")
   currently administers the USF. USAC bills carriers, including Vocalocity,
   each month based on their projected quarterly revenues and the USF
   contribution is due by the date shown on the invoice. The failure of a
   carrier such as Vocalocity to abide by its federal filing obligation thus
   has a direct impact by removing from the base of USF contributions
   telecommunications revenues that otherwise should be included, thereby
   shifting to compliant carriers additional economic burdens associated with
   the federal universal service program. Consequently, a carrier's failure
   to file required Worksheets in a timely manner frustrates the very purpose
   for which Congress enacted section 254(d) - to ensure that every
   interstate carrier "contribute, on an equitable and nondiscriminatory
   basis, to the specific, predictable, and sufficient mechanisms established
   by the Commission to preserve and advance universal service." Viewed in
   this context, the Telecommunications Reporting Worksheet is not only an
   administrative tool, but a fundamental and critical component of the
   Commission's Universal Service program.

   Title IV of the Americans with Disabilities Act of 1990, codified at 47
   U.S.C. S: 225, directs the Commission to ensure that interstate and
   intrastate telecommunications relay services are available, to the extent
   possible and in the most efficient manner, to hearing-impaired and speech
   impaired individuals in the United States. The Commission established the
   Telecommunications Relay Service ("TRS") Fund, currently administered by
   the National Exchange Carrier Association ("NECA"), to reimburse TRS
   providers for the costs of providing interstate TRS. Pursuant to section
   64.604 of the Commission's rules, every carrier providing interstate
   telecommunications services must contribute to the TRS fund. The
   Commission extended the requirement to contribute to the interstate TRS
   Fund to interconnected VoIP providers such as Vocalocity "consistent with
   [the Commission's] obligation to ensure the availability of TRS `to the
   extent possible and in the most efficient manner' to persons with hearing
   or speech disabilities." This requirement became effective October 5,
   2007, and NECA began issuing invoices to interconnected VoIP providers in
   March 2008 for their 2007 TRS contribution based on 2006 4th quarter
   revenue.

   In addition, section 251(e)(1) of the Act directs the Commission to
   oversee the administration of telecommunications numbering to ensure the
   availability of telephone numbers on an equitable basis. Section 251(e)(2)
   of the Act provides that "[t]he cost of establishing telecommunications
   numbering administration arrangements and number portability shall be
   borne by all telecommunications carriers on a competitively neutral basis
   as determined by the Commission." In carrying out this statutory
   directive, the Commission adopted section 52.17 of its rules, which
   requires, among other things, that all telecommunications carriers
   contribute toward the costs of numbering administration on the basis of
   their end-user telecommunications revenues for the prior calendar year.
   The Commission also adopted section 52.32 of its rules, which requires
   that telecommunications carriers contribute to the shared costs of
   long-term number portability as provided in the Commission's rules.
   Effective March 24, 2008, the Commission extended the North American
   Numbering Plan ("NANP") administration and local number portability
   ("LNP") contribution requirements to interconnected VoIP providers such as
   Vocalocity. Welch LLP ("Welch"), the NANP administrator, began invoicing
   interconnected VoIP providers in June 2008. Neustar, Inc. ("Neustar"), the
   LNP administrator, began invoicing interconnected VoIP providers in March
   2008.

   We conclude that Vocalocity did not comply with the Commission's rules and
   orders requiring interconnected VoIP providers to make certain regulatory
   filings and associated payments. As a provider of interconnected VoIP
   services, Vocalocity was required to register with the Commission, file
   annual and quarterly Telecommunications Reporting Worksheets, contribute
   to the USF and the TRS fund, and contribute to the shared costs of
   numbering administration and local number portability. The record in our
   inquiry demonstrates that while Vocalocity began operating as an
   interconnected VoIP provider in 2005, it did not register with the
   Commission until April 1, 2008, two years after the Commission extended
   USF requirements to interconnected VoIP providers and approximately three
   months after USAC advised Vocalocity of its obligation to register and
   contribute to the USF. Additionally, Vocalocity filed its FCC Form 499-Q
   due on August 1, 2008 a full one month late.

   Based upon its April 1, 2008 filing, Vocalocity received an invoice from
   USAC in July 2008, which USAC confirms Vocalocity paid on time. However,
   Vocalocity should have been contributing to the USF based upon the
   projected fourth quarter 2006 revenues it was required to report on a Form
   499-Q that should have been filed by August 1, 2006. USAC further confirms
   that Vocalocity failed to timely remit any payment toward its USF
   obligation as represented on invoices due by September 15, 2008, October
   15, 2008, November 14, 2008 and December 15, 2008, and that Vocalocity
   contributed less than the amount represented on the invoices for payment
   due on January 15, 2009, February 13, 2009, March 13, 2009, August 14,
   2009, September 15, 2009, and October 15, 2009. NECA confirms that it sent
   an invoice to Vocalocity for its TRS obligations on July 6, 2008, with
   payment due by July 28, 2008. NECA further confirms that Vocalocity paid
   the July 6, 2008 invoice on October 15, 2008, more than two months late.
   Welch confirms that it sent Vocalocity an invoice for payment of NANP fees
   dated June 12, 2008, with payment due July 12, 2008. Welch further
   confirms that Vocalocity paid the NANP invoice approximately three months
   late. Finally, Neustar confirms that it sent Vocalocity invoices for
   payment of LNP fees from July 2008 through April 2010, with payments due
   45 days from the dates of the invoices. Neustar further confirms that
   Vocalocity paid the LNP invoices from Neustar for July 2008, May 2009,
   July and September 2009 at least a full month late and failed to pay the
   invoice for February 2010.

   We therefore conclude that Vocalocity apparently violated sections 52.17,
   52.32, 54.706, 54.711, 64.604 and 64.1195 of the Commission's rules by
   failing to file a registration statement and then meet the related filing
   and payment obligations that are triggered by that filing.

   If, after receipt of this citation, Vocalocity violates the Communications
   Act or the Commission's rules in any manner described herein, the
   Commission may impose monetary forfeitures not to exceed $16,000 for each
   such violation or each day of a continuing violation up to $112,500 for a
   single continuing violation.

   You may respond to this citation within 30 days from the date of this
   letter either through (1) a personal interview at the Commission's Field
   Office nearest to your place of business, (2) a written statement, or (3)
   a teleconference interview with the Commission's Investigations & Hearings
   Division in Washington, D.C. Your response should specify the actions that
   you are taking to ensure that you do not violate the Commission's rules
   governing regulatory filings and associated payments, as described above.

   Please contact Mindy Littell at (202) 418-0789 to arrange a teleconference
   interview or an interview at the closest field office, if you wish to
   schedule a personal interview. You should schedule any interview to take
   place within 30 days of the date of this letter. You should send any
   written statement within 30 days of the date of this letter to:

   Mindy Littell

   Investigations & Hearings Division

   Enforcement Bureau

   Federal Communications Commission

   445-12th Street, S.W., Rm. 4-C330

   Washington, D.C. 20554

   Reference EB-08-IH-1151 when corresponding with the Commission.

   Under the Privacy Act of 1974, 5 U.S.C. S: 552a(e)(3), we are informing
   you that the Commission's staff will use all relevant material information
   before it, including information that you disclose in your interview or
   written statement, to determine what, if any, enforcement action is
   required to ensure your compliance with the Communications Act and the
   Commission's rules.

   The knowing and willful making of any false statement, or the concealment
   of any material fact, in reply to this citation is punishable by fine or
   imprisonment under 18 U.S.C. S: 1001.

   Thank you in advance for your anticipated cooperation.

   Sincerely,

   Hillary S. DeNigro

   Chief, Investigations & Hearings Division

   Enforcement Bureau

   47 C.F.R. S:S: 52.17, 52.32, 54.706, 54.711, 64.604 and 64.1195.

   See Letter from Trent B. Harkrader, Deputy Chief, Investigations &
   Hearings Division, Enforcement Bureau, FCC, to Boris Jerkunica, CEO,
   Vocalocity, dated May 21, 2008.

   See Excel spreadsheet response provided by Vocalocity, Inc. on or about
   July 11, 2008 and attachments thereto ("LOI Response").

   See Letter from Trent B. Harkrader, Deputy Chief, Investigations &
   Hearings Division, Enforcement Bureau, FCC, to Boris Jerkunica, CEO,
   Vocalocity, dated August 20, 2008 ("Supplemental LOI").

   See Vocalocity August 29, 2008 response to Supplemental LOI ("Supp. LOI
   Response").

   See LOI Response; Supp. LOI Response. Vocalocity further explicitly admits
   that it is an interconnected VoIP provider. See Vocalocity, Inc. 2008 FCC
   Form 499-A, attached to the LOI Response.

   See LOI Response; Supp. LOI Response.

   See LOI Response; Supp. LOI Response.

   47 U.S.C. S: 254(d).

   47 C.F.R. S: 54.706(b). Beginning April 1, 2003, carrier contributions
   were based on a carrier's projected, rather than historical, revenues. Id.
   See also Federal-State Joint Board on Universal Service, 1998 Biennial
   Regulatory Review  - Streamlined Contributor Reporting Requirements
   Associated with Administration of Telecommunications Relay Services, North
   American Numbering Plan, Local Number Portability, and Universal Service
   Support Mechanisms, Telecommunications Services for Individuals with
   Hearing and Speech Disabilities, and the Americans with Disabilities Act
   of 1990, Administration of the North American Numbering Plan and North
   American Numbering Plan Cost Recovery Contribution Factor and Fund Size,
   Number Resource Optimization, Telephone Number Portability,
   Truth-in-Billing and Billing Format, Report and Order and Second Further
   Notice of Proposed Rulemaking, 17 FCC Rcd 24952, 24969-74, P:P: 29-39
   (2002) ("Interim Contribution Order").

   See 47 U.S.C. S: 254(d) ("Any other provider of interstate
   telecommunications may be required to contribute to the preservation and
   advancement of universal service if the public interest so requires.");
   Universal Service Contribution Methodology, Federal-State Joint Board on
   Universal Service, 1998 Biennial Regulatory Review -- Streamlined
   Contributor Reporting Requirements Associated with Administration of
   Telecommunications Relay Service, North American Numbering Plan, Local
   Number Portability, and Universal Service Support Mechanisms,
   Telecommunications Services for Individuals with Hearing and Speech
   Disabilities, and the Americans with Disabilities Act of 1990,
   Administration of the North American Numbering Plan and North American
   Numbering Plan Cost Recovery Contribution Factor and Fund Size, Number
   Resource Optimization, Telephone Number Portability, Truth-In-Billing and
   Billing Format, IP-Enabled Services, Report and Order and Notice of
   Proposed Rulemaking, 21 FCC Rcd 7518 (2006) (extending section 254(d)
   permissive authority to require interconnected VoIP providers to
   contribute to the USF) ("2006 Contribution Methodology Order"), petition
   for review denied, and vacated in part on other grounds, Vonage Holding
   Corp. v. FCC, 489 F.3d 1232, 2007 WL 1574611 (D.C. Cir. 2007);
   Federal-State Joint Board on Universal Service; IP-Enabled Services, Final
   Rule, 71 FR 38781 (2006).

   2006 Contribution Methodology Order, 21 FCC Rcd at 7549, P: 61.

   47 C.F.R. S: 54.711. Carriers file the Quarterly Worksheet, the FCC Form
   499-Q, to show projected revenues. Carriers must submit their Quarterly
   Worksheets no later than February 1, May 1, August 1, and November 1 of
   each year. See Quarterly Worksheet Form at 1. Carriers must submit their
   annual Worksheets no later than April 1 of each year. See Annual Worksheet
   Form at 1.

   47 C.F.R. S: 54.701(a).

   47 C.F.R. S: 54.711(a) ("The Commission shall announce by Public Notice
   published in the Federal Register and on its website the manner of payment
   and the dates by which payments must be made.") See, e.g., "Proposed
   Second Quarter 2006 Contribution Factor," Public Notice, 21 FCC Rcd 2379
   (Wireline Comp. Bur. 2006) ("Contribution payments are due on the date
   shown on the administrator invoice.").

   Sixty days prior to the start of each quarter, USAC is required to provide
   the Commission with a projection of the high cost, low income, schools and
   libraries, and rural health care funding requirements for the following
   quarter. See www.universalservice.org/overview/filings. Based on USAC's
   projection of the needs of the USF, and revenue projections from the
   registered carriers subject to universal service requirements, the
   Commission establishes a specific percentage of interstate and
   international end-user revenues that each subject telecommunications
   provider must contribute toward the USF. This percentage is called the
   contribution factor. The contribution factor, and, consequently, the
   amount owed to the USF by each affected telecommunications company,
   changes each quarter, depending on the needs of the USF and
   carrier-provided revenue projections. See
   www.fcc.gov/wcb/universal_service/quarter. Thus, in cases where a carrier,
   such as Vocalocity, fails to file required Worksheets reporting its
   revenue projections in a timely fashion, its revenues are excluded from
   the contribution base from which universal assessments are derived, and
   the economic burden of contributing falls disproportionately on carriers
   that have satisfied their reporting obligations.

   47 U.S.C. S: 254(d).

   Pub. L. No. 101-336, S: 401, 104 Stat. 327, 366-69 (1990) (adding section
   225 to the Act).

   See Telecommunications Relay Services and the Americans with Disabilities
   Act of 1990, Third Report and Order, 8 FCC Rcd 5300, 5301, P: 7 (1993)
   (TRS III Order).

   See 47 C.F.R. S: 64.604(c)(5)(iii).

   See IP-Enabled Services, Report and Order, 22 FCC Rcd 11275, 11294 P: 36
   (2007).

   IP-Enabled Services, Final Rule, 72 FR 43546 (2007), quoting 47 U.S.C. S:
   225(b)(1).

   47 U.S.C. S: 251(e)(1).

   47 U.S.C. S: 251(e)(2).

   47 C.F.R. S: 52.17(a).

   47 C.F.R. S: 52.32. Unlike universal service, TRS and the cost recovery
   mechanism for the North American Numbering Plan, there is no "fund" for
   Local Number Portability. Neustar, which acts as the Local Number
   Portability Administrator, recovers the costs of implementing the Act's
   requirements for local number portability from telecommunications
   carriers. See, e.g.,  http://www.npac.com/home/lnpoverview.shtml; 
   http://www.neustar.biz/interoperability/lnp.cfm (providing general
   information concerning LNP administration).

   See Matter of Telephone Number Requirements for IP-Enabled Services
   Providers, Local Number Portability Porting Interval and Validation
   Requirements, IP-Enabled Services, Telephone Number Portability, Final
   Regulatory Flexibility Analysis Numbering Resource Optimization, Report
   and Order, Declaratory Ruling, Order on Remand, and Notice of Proposed
   Rulemaking, 22 FCC Rcd 19531, 19532 P: 1 (2007); Matter of IP-Enabled
   Services, Telephone Number Portability, Numbering Resource Optimization,
   Final Rule, 73 FR 9463 (2008).

   See LOI Response.

   See Supp. LOI Response.

   See Letter from Tarig Rahamtalla, USAC, to Boris Jerkunica, Vocalocity,
   dated December 31, 2007.

   See 2006 Contribution Methodology Order, 21 FCC Rcd at 7548, P: 60.
   Because Vocalocity did not register with USAC until April 1, 2008 and thus
   never filed the 499-Q as required by August 1, 2006, USAC never billed
   Vocalocity for its USF obligations. Regardless, Vocalocity was responsible
   for meeting its obligations even without having received an invoice from
   USAC. The Act and our rules, however, do not condition payment on receipt
   of an invoice or other notice from the NANP administrator. See 47 U.S.C.
   S: 254(d); 47 C.F.R. S: 54.706. See also Globcom, Inc., Notice of Apparent
   Liability for Forfeiture and Order, 18 FCC Rcd 19893, 19896, P: 5, note 22
   (2003)

   47 C.F.R. S:S: 52.17, 52.32, 54.706, 54.711, 64.604 and 64.1195.

   See 47 C.F.R. S: 1.80(b)(3).

   1

   Federal Communications Commission DA 10-913

   6

   Federal Communications Commission DA 10-913

   FEDERAL COMMUNICATIONS COMMISSION

                             WASHINGTON, D.C. 20554